Public borrowing hike overshadows Osborne's tax breaks

Budget Day 2012 Chancellor of the Exchequer George Osborne delivered his Budget statement to the House of Commons today, which he claimed was about supporting working families and helping those seeking employment.

He reaffirmed his "unwavering commitment to deal with debt" and described it as a "fiscally neutral Budget".

But the growth forecast for 2012 remains precarious, standing today at just 0.8 per cent, the chancellor conceded. He hopes to see that rise to 2 per cent next year and to 2.7 per cent by 2014.

He added that Corporation tax will be reduced to 24 per cent next month, while the bank levy rate would also be adjusted to ensure that bankers do not benefit from that cut.

"The deficit reduction plan is on course and we will not waver from it, said Osborne. "If not it could lead to a sharp climb in interest rates."

Many of the details laid out by the Number 11 occupant on Wednesday had already been leaked to the press and it contained few surprises.

He said it was "a reforming Budget that seeks to address debt". Osborne breathlessly added that he wanted to see the "richest pay more [so that] the economy benefits and Britain is competitive again."

The Chancellor echoed the comments he made during his Mini-Budget last autumn by reiterating that the Eurozone crisis remained a "significant" problem for Britain's limping economy.

He announced that personal allowance will rise so that earners would need to bring home £9,209 "before they have to pay any tax. Millions of working people will be £220 better off every year," he said.

"This Coalition gov has not settled for a do-nothing Budget," he thundered.

"This country borrowed its way into trouble and now we're going to earn our way out," Osborne said as he commended the Budget statement to the House.

The Chancellor is undoubtedly hoping to grab the headlines with his decision to cut the 50p top tax rate introduced by the previous Labour government. From April 2013 the rate paid on earnings over £150,000 will fall to 45p.

He told the House that the "50p tax rate is the highest in the G20... It is widely acknowledged by international observers as harming to the British economy."

But UK growth is still moving along at a sluggish pace and Osborne's Budget illustrated how little he has tucked away in the Treasury's coffers – a fact underscored by new record deficit figures for February published today that reveal public sector net borrowing for last month had ballooned to £15.2bn – from £8.9bn in February 2011.

The leader of the opposition, Ed Miliband, said that today marked the end of "we're all in it together because after today's Budget millions will be paying more while the rich pay less. For Britain's millionaires, a giant income tax cut".

He asked: "What planet is the Chancellor on?" Miliband went on to claim that it was "the government's very own banker's bonus".